Himachal Pradesh High Court
Yudhister Lal Thukral vs Smt. Sumitra Devi And Ors. on 22 November, 2001
Equivalent citations: [2002]112COMPCAS493(HP), [2003]44SCL509(HP)
Author: Arun Kumar Goel
Bench: Arun Kumar Goel
JUDGMENT Arun kumar Goel, J.
1. It is proposed to dispose of all these five criminal revisions by a common judgment, because except for cheques as well as memos issued by the bankers, all other questions of law and fact involved in these revisions petitions are identical.
2. Against the petitioner, the late Shri Prakash Nath Chawla (predecessor-in-interest of the respondents), preferred a complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "the Act"). After conclusion of the trial, the petitioner was found guilty of having committed offence under Section 138 of the Act. Accordingly, he was sentenced to pay a fine of Rs. 40,000 and in default to undergo simple imprisonment for three months in each case. In case the amount is paid, the same was to be given as compensation to the complainant.
3. It may be observed that the learned trial court has found the petitioner guilty of having committed offence under Section 138 of the Act whereunder also notice of accusation was served upon him. This seems to be an omission on the part of the court below. The observations made in this behalf by the learned appellate court below are correctly recorded.
4. At the time of hearing of these revision petitions, it was urged by Mr. Shukla that the account of the firm M/s. Rajiv Mechanical Works, Sirhind was settled between its partners and according to him, a sum of Rs. 2,00,000 by means of demand draft was paid by the petitioner to the deceased. This demand draft was issued from Sirhind.
5. He further submitted that the account at Una in State Bank of Patiala was opened by the deceased in connivance with his son Chander Mohan Chawla, as well as bank officials. It was Chander Mohan Chawla who had introduced the petitioner in the account opening form with the State Bank of Patiala at Una. According to him, witnesses on the agreement exhibit CW1/A were not known to the petitioner. In fact, there was no need for his client to open an account at Una. Per him, both these facts coupled with the connivance of the deceased, his son and bank officials clearly rebutted the presumption under Section 118 of the Act to the cheques in all these five cases. As such he prayed for allowing these revision petitions and consequently acquitting the petitioner in all these cases.
6. All these pleas have been controverted on behalf of the respondents. Both learned counsel after referring to evidence on record submitted that the requirements of law as envisaged under Section 138 of the Act are established beyond reasonable doubt, therefore, there is no infirmity either on law or in the facts and circumstances of the case so as to call for any interference in all these cases. According to them, even if it be assumed for the sake of argument that what is alleged by the petitioner is correct, on the basis of the evidence only one and irresistible conclusion points towards the guilt of the petitioner. Therefore, no exception can be taken to the conclusions arrived at by the courts below while holding the petitioner guilty as aforesaid.
7. A few facts regarding which the parties are not at variance need to be noted. The deceased, his son and the petitioner were running a partnership business at Sirhind. This was closed down. The assets of the firm were sold and recoveries effected. It was the petitioner who usurped everything which position has been denied on behalf of the petitioner. The fact remains that Rs. 2,00,000 by means of bank draft (receipt whereof the deceased did not dispute) plus Rs. 85,000 in cash is alleged to have been received by the deceased in settlement of accounts in question. Therefore, nothing was due and payable according to the petitioner.
8. On the other hand, the deceased claimed that vide exhibit PW-l/A the agreement, a settlement was arrived at between all the three partners as a result of closing down of the business they were carrying on. Pursuant to this, the petitioner is stated to have issued eight cheques in the sum of Rs. 25,000 each payable between October 15, 1994, and February 15, 1997. All these cheques were drawn on his banker, State Bank of Patiala at Una by the petitioner. Five cheques when presented on different dates were dishonoured. The deceased-complainant issued notices as envisaged under Section 138 of the Act telegraphically, through his counsel, as well as under certificate of posting. When the petitioner failed to pay the amount in question, five complaints were filed on different dates as is revealed by the record.
9. It may not be out of place to notice here that at the time of hearing, it was not disputed on behalf of the petitioner that he is not a signatory to the cheques and/or to the agreement in question. Similarly, it was also not pleaded that notice regarding dishonour was not served upon the petitioner and/or it was beyond time in all these cases.
10. The only ground urged was that the petitioner was forced to execute the agreement and issue cheques numbering eight as detailed in the agreement at Una by the deceased complainant. After having paid a sum of Rs. 2,85,000, there was hardly any occasion for either entering into an agreement or for issuance of cheques. Thus, the cheques were not issued by the petitioner for any debt or other liability legally enforceable, as such no benefit can be derived from the statutory presumption under Section 138 of the Act.
11. Admittedly, after the notice was issued in each of these cases, the petitioner has not paid the amount in question.
12. Here the relevant Sub-clause (a) of Section 118 of the Act under Chapter XIII needs to be noted as it is going to have material bearing in the decision of these cases :
"118- Presumptions as to negotiable instrument,--Until the contrary is proved, the following presumptions shall be made :
(a) of consideration : that every negotiable instrument was made or drawn for consideration, and that every such instrument when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration."
13. As already observed, statutory presumption is attached to a negotiable instrument, cheque in the present case, after its execution was admitted by the petitioner. Though it is rebuttable, however, when a reference is made either to the cross-examination of witnesses or to the stand taken under Section 313 of the Criminal Procedure Code, or when a reference is made to the statements of DWs, this presumption cannot be said to have been rebutted. In case the petitioner denied having signed the cheques, statutory presumption was not available. While admitting issuance of cheques, the stand of the petitioner is specific that those were got executed by him under duress as well influence of alcohol.
14. For the reasons to be recorded hereinafter this plea cannot be accepted. The cheques in question in all these cases were presented by the deceased complainant for collection through Central Bank of India, Una. Those were dishonoured by the banker of the petitioner with endorsement "payment stopped by the drawer". There is evidence on record to show that the petitioner had stopped the payment of all the cheques and had intimated his banker in that behalf.
15. In case what is now alleged was correct that the cheques were got signed either under duress or under the influence of alcohol, there was nothing that prevented the petitioner to have sent an identical notice to the deceased complainant also. Issuance of cheques is admitted even in the communication addressed to the bank. In case the cheques had been got issued under duress, the petitioner could have immediately informed the deceased not to present the cheques in question highlighting the circumstances whereunder, according to him, those were issued.
16. Admittedly, there is no such action taken by him. The complaints in all these cases were filed by the deceased complainant one after the other after dishonour of the cheques in question.
17. On the basis of the evidence on record as well admitted facts as noted hereinabove, the presumption under Section 118(a) of the Act is not rebutted. As such reliance placed on behalf of the petitioner on Kundan Lal Rallaram v. Custodian, Evacuee Property, Bombay, AIR 1961 SC 1316, is misconceived. In this behalf, it may also be observed that the son of the petitioner had appeared as DW-3. He admitted the contents of the document exhibit DW-3/A having been signed by his father and its being on the pad of the firm. This is dated June 3, 1994, and when translated into English, it reads as under :
"I, Yudhister Lal son of Ved Prakash resident of Sirhind owes to Shri P. N. Chawla Rs. 4,21,646 (rupees four lakhs twenty-one thousand six hundred and forty-six only) and I will pay the same at the earliest.
(Sd.) Yudhishter Lal (In English).
June 3, 1994."
18. It is thereafter that the agreement exhibit CW-l/A was executed between all the three partners of the firm M/s. Rajiv Mechanical Works. In this document, there is a recital of Rs. 2,00,000 lakhs having been paid by the petitioner to the deceased complainant on June 27, 1994. It is only thereafter that for the balance amount, cheques in question were issued. Notices were sent telegraphically, by registered post as well as under certificate of posting. If what is being now claimed by the petitioner was correct, the least he could do was to have replied to these notices. At the risk of repetition, it may be observed here that when specifically asked, learned counsel for the petitioner did not either dispute the receipt of the notice or legality of the same. Nor any defect in the notices has been found out on examination at the time of hearing.
19. CW-2 Ram Kumar Sharma has categorically stated that the cheques were not encashed because the drawer had stopped payment. As such the dishonoured cheques were returned with the memo of the bank to the collecting bank, i.e., Central Bank of India. When the petitioner could intimate the bank regarding stop payment, there was nothing that prevented him from intimating the deceased complainant not to present the cheques for encashment for the reasons stated by him.
20. The purpose of bringing Section 138 of the Act on the statute book was to enhance the acceptability of negotiable instruments like a cheque in settlement of liabilities by making the drawer of the cheque liable for penalty in case the same is dishonoured. At the same time, this section provides adequate safeguards to an honest drawer of the cheque.
21. After the cheque is dishonoured and intimation is given to the person who has issued it, he has another opportunity to liquidate the amount within the time stipulated under Section 138 of the Act. May be that a drawer is expecting some payments to come in the course of time or in a given case a cheque sent by him for collection and expecting its effects to be credited to his account, he issues a cheque in anticipation to a third party. But if such cheque is dishonoured, its direct consequence is that no amount would be credited into his account, cheque issued by such drawer also gets dishonoured. With a view to enable such drawer to pay the amount, the statute has taken adequate care.
22. Another object of incorporating Section 138 of the Act seems to be to build faith in the efficacy of the banking system, adding credibility to business transactions based on negotiable instruments. With this end in view as well as also considering that these are essential to economic life in a developing economy of a country like India, that the provisions have been incorporated to safeguard the trust of a creditor in the drawer of a negotiable instrument, like a cheque.
23. In Electronics Trade and Technology Development Corporation Ltd. v. Indian Technologists and Engineers (Electronics) P. Ltd, [1996] 86 Comp Cas 30; [1996] 2 Shimla LJ 817, the Supreme Court while dealing with a case where a cheque was returned with different endorsements held as under (page 33) :
"It would thus be clear that when a cheque is drawn by a person on an account maintained by him with the banker for payment of any amount of money to another person out of the account for the discharge of the debt in whole or in part or other liability is returned by the bank with the endorsement like, (1) in this case, 'I refer to the drawer'; (2) 'instructions for stoppage of payment', and (3) 'stamp exceeds arrangement', it amounts to dishonour within the meaning of Section 138 of the Act. On issuance of the notice by the payee or the holder in due course after dishonour, to the drawer demanding payment within 15 days from the date of the receipt of such a notice, if he does not pay the same, the statutory presumption of dishonest intention, subject to any other liability, stands satisfied . . .
The object of bringing Section 138 on the statute appears to be to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. Despite civil remedy, Section 138 is intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a bank and induces the payee or holder in due course to act upon it. Section 138 draws a presumption that one commits the offence if he issues the cheque dishonestly. It is seen that once the cheque has been drawn and issued to the payee and the payee has presented the cheque and thereafter, if any instructions are issued to the bank for non-payment and the cheque is returned to the payee with such an endorsement, it amounts to dishonour of cheque and it comes within the meaning of Section 138. Suppose after the cheque is issued to the payee or to the holder in due course and before it is presented for encashment, notice is issued to him not to present the same for encashment and yet the payee or holder in due course presents the cheque to the bank for payment and it is returned on instructions, Section 138 does not get attracted..."
In K. Bhaskaran v. Sankaran Vaidhyan Balan [1999] 7 SCC 510 ; [2000] 99 Comp Cas 268, when the signatures on the cheques were admitted by an accused (like the petitioner),, the presumption of Section 118 of the Act was drawn for consideration, it was held as under (page 271 of Comp Cas) :
"As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the court to presume that the holder of the cheque received it for the discharge of any debt or liability. The burden was on the accused to rebut the aforesaid presumption. The trial court was not persuaded to rely on the interested testimony of DW-1 to rebut the presumption. The said finding was upheld by the High Court. It is not now open to the accused to contend differently on that aspect."
In Kusum Ingots and Alloys Ltd. v. Pennar Peterson Securities Ltd. [2000] 100 Comp Cas 755 ; [2000] 2 SCC 745, the Supreme Court while examining the objects and reasons of bringing Section 138 of the Act held as under (page 762 of Comp Cas) :
"On a reading of the provisions of Section 138 of the Negotiable Instruments Act it is clear that the ingredients which are to be satisfied for making out a case under the provision are :
(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability ;
(ii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier ;
(iii) that cheque is returned by the bank unpaid, either because the amount of money standing to the credit of the account is insufficient to honour the cheque or it exceeds the amount arranged to be paid from that account by an agreement made with the bank ;
(iv) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid ;
(v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
If the aforementioned ingredients are satisfied then the person who has drawn the cheque shall be deemed to have committed an offence. In the Explanation to the section clarification is made that the phrase 'debt or other liability' means a legally enforceable debt or other liability."
24. In Hiten P. Dalai v. Bratindranath Banerjee [2000] 5 JT 386 ; [2001] 106 Comp Cas 574 (SC), while considering whether the plea of an accused like the petitioner rebutted the statutory presumption on account of non-appearance of the accused in the witness box, it was held as under (pages 585 and 586 of Comp Cas) :
"The brunt of the evidence given by the appellant's witnesses was as to the nature of the transactions between the appellant and the bank. However, not one of the defence witnesses gave any evidence in support of the only defence of the appellant, namely that the four cheques in question had been given towards intended transactions which did not take place. No one said why the appellant had executed and delivered the particular cheques to the bank or that the appellant had not given the four cheques to discharge his debts to the bank. Nor did any defence witness claim that the cheques were given on account of any ready forward transactions. In fact, DW-1 in cross-examination admitted that it was not the practice of a purchasing party to hand over cheques in advance. The appellant alone could have said why he had admittedly executed the four cheques, handed them over to the bank and never asked for their return. He did not choose to do so ...
The burden was on the appellant to disapprove the presumptions under sections 138 and 139 a burden which he failed to discharge at all. The averment in the written statement of the appellant was not enough. Incidentally, the defence in the written statement that the four cheques were given for intended transactions was not the answer given by the appellant to the notice under Section 138. Then he had said that the cheques were given to assist the bank for restructuring (exhibit H). It was necessary for the appellant at least to show on the basis of acceptable evidence either that his explanation in the written statement was so probable that a prudent man ought to accept it or to establish that the effect of the material brought on the record, in its totality, rendered the existence of the fact presumed, improbable. (Vide Trilok Chand Jain v. State of Delhi, [1975] 4 SCC 761). The appellant has done neither. In the absence of any such proof the presumptions under sections 138 and 139 must prevail."
In K. N. Beena v. Muniyappan [2001] 107 Comp Cas 459 (SC) ; [2001] 9 JT 228, it was held as under (page 460 of Comp Cas) :
"In our view the impugned judgment cannot be sustained at all. The judgment erroneously proceeds on the basis that the burden of proving consideration for a dishonoured cheque is on the complainant. It appears that the learned judge had lost sight of sections 118 and 139 of the Negotiable Instruments Act. Under Section 118, unless the contrary was proved, it is to be presumed that the negotiable instrument (including a cheque) had been made or drawn for consideration. Under Section 139 the court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in part, of a debt or liability. Thus in complaints under Section 138, the court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused. This court in the case of Hiten P. Dalai v. Bratindranath Banerjee [2001] 106 Comp Cas 574 ; [2001] 6 SCC 16 has also taken an identical view.
In this case admittedly the first respondent has led no evidence except some formal evidence. The High Court appears to have proceeded on the basis that the denials/averments in his reply dated May 21, 1993, were sufficient to shift the burden of proof onto the appellant/complainant to prove that the cheque was issued for a debt or liability. This is an entirely erroneous approach. The first respondent had to prove in the trial, by leading cogent evidence, that there was no debt or liability. The first respondent not having led any evidence could not be said to have discharged the burden cast on him. The first respondent not having discharged the burden of proving that the cheque was not issued for a debt or liability, the conviction as awarded by the magistrate was correct. The High Court erroneously set aside that conviction."
25. Examining the present case in the light of the facts discussed hereinabove as well as on the basis of the law laid down by the Supreme Court, there is no illegality and/or impropriety committed by the courts below while holding the petitioner guilty.
26. Learned counsel for the petitioner at the of time of hearing of these cases made an alternate prayer that if none of his submissions find favour, then the sentence needs to be reduced. As according to him, the petitioner is the sole bread-winner of the family and has three daughters of marriageable age. By raising a loan from the bank, he is running a petty karyana shop at Sirhind and with difficulty making both ends meet. Thus he prayed for taking a lenient view in all these cases. Looking to the punishment imposed, it is in fact payment of fine only and it is in default of the payment whereof, the petitioner has been directed to undergo simple imprisonment for three months. Thus, it is clear that no substantive imprisonment has been imposed upon the petitioner. It is felt that on the basis of the materials on record, he has already been lightly dealt with particularly when the offence stands established against him in each of the five cases. As such the plea urged on behalf of the petitioner to take a lenient view on the quantum of sentence is rejected.
27. No other point urged.
28. In view of the aforesaid discussion, there is no merit in these revision petitions which are accordingly dismissed and consequently conviction and sentence imposed upon the petitioner is upheld. Registry is directed to place an authenticated copy of this judgment on the files of Criminal Revisions Nos. 100, 101, 102 and 103 of 2001.